Court Knocks Down State Burma Law
By Peter J. Spiro
In a long-awaited decision confronting the intersection
of federalism and foreign relations, the Supreme Court
has struck down a Massachusetts law restricting state
purchases from companies doing business in Burma.
The Court's June 19 ruling in Crosby v. National
Foreign Trade Council was on narrow, non-constitutional
grounds. Although the decision puts similar state
and local anti-Burma measures at least temporarily
on ice, it is unlikely to emerge as the final word
on foreign policymaking by state and local actors.
Crosby considered a 1996 Massachusetts law
that in most instances barred state entities from
purchasing goods or services from companies (foreign
and domestic) broadly defined as doing business in
Burma. The law provoked protests from Japan and the
European Union, who subsequently challenged the measure
in the World Trade Organization as inconsistent with
U.S. obligations under the WTO Agreement on Government
Procurement. Congress soon after adopted federal sanctions
against Burma.(1) Among
other elements the 1996 federal measure authorized
the President to ban all new investment by U.S. companies
in Burma (an authority later invoked),(2)
and directed him to develop a comprehensive, multilateral
strategy to restore democracy in Burma.
An industry association of companies engaged in
foreign trade challenged the Massachusetts law as
unconstitutional and preempted by the federal statute.
Lower federal courts considering the case ruled against
the measure on broad constitutional grounds.(3)
In addition to accepting the preemption challenge,
the First Circuit also found the Massachusetts law
to violate both the dormant Foreign Commerce Clause
and the more general dormant foreign affairs power,
in line with the Supreme Court's 1968 decision in
Zschernig v. Miller.(4)Zschernig
had deemed unconstitutional state probate statutes
restricting inheritance rights of persons residing
in Communist countries insofar as the laws posed more
than an "incidental or indirect" effect on foreign
relations, even in the absence of any federal law
or policy on the issue.
In his opinion for a unanimous court, Justice Souter
found the state measure preempted by the federal sanctions
regime, but abstained from addressing constitutional
arguments against the law.(5)
Setting the standard for preemption as any state law
"stand[ing] as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress,"(6)
the Court held the state law to undermine three elements
of the federal Burma sanctions regime. First, the
Court found the state law to undermine discretion
expressly afforded the President by Congress in the
devising of a Burma policy. Second, Souter detailed
substantive differences between the state and federal
approaches: the federal provided for a ban only on
new investment while the state penalized pre-existing
operations in Burma; the federal targeted only U.S.
companies, while the state law extended to foreign
concerns as well.
Finally, the opinion found the state law to undermine
Congress's instruction that the President undertake
multilateral efforts to bring democracy to Burma.
On this score, Justice Souter highlighted evidence
that state measures such as the Massachusetts law
had in fact proved a distraction to international
efforts on the Burma front.(7)
The Crosby decision represents the Supreme
Court's first consideration of state and local sanctions
mechanisms developed during the anti-apartheid campaign
of the 1980's. The Court's ruling represents a significant
setback for human rights activism on that model, at
least to the extent that other federal sanctions regimes
include provisions similar to those highlighted in
the federal Burma measure. But because the decision
hinges on congressional intent, Crosby does
not dictate the limits of state and local action in
other foreign policy contexts. The Court carefully
refused to speculate on how it would have ruled on
the South Africa laws.(8)
Even with respect to the nonfederal Burma measures,
Congress could in effect overrule the result in Crosby
by expressly approving state and local measures such
as the Massachusetts law (including those adopted
by New York, Los Angeles, Philadelphia, and Vermont).
Supporters of the Massachusetts law have vowed to
seek such legislation in Crosby's wake.
The broader question of constitutional constraints
on state and local foreign policymaking comes away
from Crosby largely untouched. Justice Souter's
preemption analysis does provide some ammunition for
those seeking to entrench a dormant foreign affairs
power. Most notably, the opinion invokes a primary
rationale for unified federal policymaking that has
also supported constitutional limitations on non-federal
activity: "[i]t is not merely that the differences
between the state and federal Acts in scope and type
of sanctions threaten to complicate discussions,"
Souter observed, "they compromise the very capacity
of the President to speak for the Nation with one
voice in dealing with other governments."(9)
In the face of the Court's failure directly to confront
the constitutional issues, however, the debate over
how federalism principles should apply in the realm
of foreign relations is unlikely to subside.
About the Author:
Peter J. Spiro is an Associate Professor at Hofstra University
Law School. He will be directing a new Society research
project on federalism, foreign relations, and international
Following are a list of related articles:
Brannon P. Denning & Jack H. McCall, States' Rights
and Foreign Policy, Foreign Affairs, Jan.-Feb. 2000,
Jack L. Goldsmith, Federal Courts, Foreign Affairs,
and Federalism, 83 Va. L. Rev. 1617 (1997).
Michael D. Ramsey, The Power of the States in Foreign
Affairs: The Original Understanding of Foreign Policy
Federalism, 75 Notre Dame L.R.341 (1999).
Peter J. Spiro, Foreign Relations Federalism, 70 U.
Colo. L. Rev. 1223 (1999).
Endnotes: 1. See Foreign Operations, Export
Financing, and Related Programs Appropriations Act,
1997, § 570, 110 Stat. 3009-166. 2. See Exec. Order No. 13047, 3 C.F.R.
202 (May 20, 1997). 3. See National Foreign Trade Council
v. Natsios, 181 F.3d 38 (1st Cir. 1999), affirming National
Trade Council v. Baker, 26 F. Supp. 2d 287 (D. Mass.
1998). 4. 389 U.S. 429 (1968). 5. See slip op. at 9 n.8 (expressly
reserving constitutional questions). 6. Slip op. at 8 (quoting Hines v.
Davidowitz, 312 U.S. 52, 67 (1941)). The Court declined
to rest its preemption analysis on a broader "field
preemption" basis. See slip op. at 9 n.8. 7. See slip op. at 17-21. 8. Slip op. at 23-24. The Court also
left standing its decision in Barclays Bank PLC v. Franchise
Tax Bd. of Cal., 512 U.S. 298 (1994), which found constitutional
a state tax law even though it had provoked substantial
foreign offense. Barclays could still provide
a platform from which to relax constitutional limitations
on state and local foreign policymaking, at least in
the absence of conflicting federal legislation. 9. Slip op. at 17. The "one voice"
argument stands as a core rationale for exclusive federal
policymaking. See, e.g., Japan Line, Ltd. v. County
of Los Angeles, 441 U.S. 434, 449 (1979) (finding state
tax on foreign containers to violate Foreign Commerce
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